meanwhile the italian senate approves the ages fifty four billion year old age ending weeks of musical bickering at companies price strikes and protests. and twenty years behind bars a russian pilot arrested in a us day operation in liberia is sentenced. it was transported to the ice and states on charges of conspiracy just a small cool drugs last day says he was the victim of all the illegal arrest and rendition. objects to go to north speaks to wall street analysts professor michael hudson about america's growing financial worries. hello again the welcome to the into the shop on r.t. i'm all the love and today we're going to talk about money about other people's

money and what's more important about our. politicians and the columnists from around the world have gathered in the russian city. to take part in the global political forum the decision makers are going to discuss among other things how to avoid future economic trends but does it mean the path out of the current economic recession is already clear and where does this leave here's a participant in the forum financial analyst professor michael. one of the goals of this year's u.s. law global paul supporters to find out how to reduce the gap between the rich and the poor the economic crisis that europe america is still a serious threat to the future of the euro zone his in doubt just recently america was facing the threat of a technical default that would have had a knock on effect worldwide dinner and government managed to avoid it but some

experts say the measures taken are only temporary and the threat is still there. and i welcome to the show thank you thank you thank you very much for being with us well first of all standard and poor's has downgraded while we've all been a vacation on television it's downgraded the u.s. the u.s. crates ranking is it only the beginning. of a process of downgrading the states or the investors still have faith in america because the standard and poor's downgrade it had nothing to do with investors it was a political stunt given the. i'm when there were negotiations on how to balance the us budget the obama administration and the republicans both want to cut back social security and use the budget basically to subsidize wall street and the standard poor was a public relations pact to convince people that if they didn't impose cutbacks

social security cut back medicare cut back social spending and give more money to the creditors and to wall street that somehow there would be a danger investors ignored all of this because the united states government like any central bank can print all the money it has there is no way that the united states government can default on its debt because it controls the printing press so of course it's impossible to downgrade it so the downgrade was only political nothing to do it all with finance well as you mentioned obama experts say going to burma will have to make a very hard maybe an impossible even choice right now what should be his economic priority tackling tackling the sovereign debt or unemployment he should of course tackle unemployment his policy is to increase unemployment his objective is

to lower wages by ten to twenty percent because he believes the neo liberal myth he actually believes that a race to the bottom is how to win and that if you cut back living standards if you lower wages that will make the economy more competitive well actually it makes the economy less competitive but his loyalty really is with wall street he believes that wall street is necessary to make the industrial economy work when in reality it's just the opposite of the liberal myth americans have been calling a liberal myth all along but it's been alive. the daycare. it's why is the why do you still call it a myth the what do you mean by that it. just means you don't have bama believe the liberal the neo liberal media it's been alive because the. akademi of the neo liberals led by the chicago school have controlled all of the prestigious. academic

economic journals i teach at the university of missouri and kansas city and my students in order to get promoted from assistant professor to associate professor need to publish in these journals the neoliberals make sure that if you don't believe the myth that they've told that travesty of economic history that somehow you're not able to get a job and this is. shown for instance when the neo liberals came to russia after nineteen ninety russia believed that it was being told how the west developed in the west wanted it to develop the way it did in reality the neo liberals told russia to do exactly the opposite of how america got rich to tax labor not real estate and finance not to have progressive taxation and indeed to focus on finance rather than an industry and you've seen the disaster that

happened in all of the post soviet economies and it was completely unnecessary to happen so the neo liberals in america no longer have the history of economic thought being taught in the academic curriculum you no longer have economic history being taught you have textbooks that act as if the whole economy operates on part or there's no understanding really of finance except in the business schools where they actually teach students how to take over a company empty it out increase stock market failures by borrowing money to pay out as dividends or to buyback. your own stock which of course helps the managers with exercise their stock options but the financialization process that neo liberals push end up stripping the economy of capital for tangible investment and the neo liberals in the united states the problem is not merely unemployment going

up it's that wages have been going down for over thirty years if you think about them and will have a chance to be reelected if he if he doesn't tackle it doesn't solve the problem and imply that there is no question but he will be reelected nobody in the democratic party is going to challenge him because he already has his constituency locked up the urban constituency the minorities the liberals and the republicans want to make sure that he is elected does not mean he doesn't have to the problem he doesn't have to solve the problem at all he has no intention of solving any will no no no he will continue to aggravate the problem he in the task of a politician in america or england or anywhere else is to deliver your constituency to your campaign backers his campaign finances are wall street his job is to make sure that the constituency does not protest while he does exactly the opposite of

everything that he's promised listen we all watched this through. news where with the congress trying to trying to come to an agreement on the debt and so on why did it take so long why was it so hard for the democrats and republicans to to come to disagree because it was organized like a wrestling match in a lot dramatically to make people think that the fight was all about how much to lower wages how much the lower say there was not so much as it was state by why obama by the book and the republicans the intention was to focus on. to make americans believe that you need lower living standards in order to get to survive that you need to cut back social security that you need to tighten the economy and send the economic surplus into the banking system in order for the economy to survive that's the myth michael how long do you think it's with any counseling me

we expect to see the debt ceiling achieved again by the debt ceiling do you mean relieved there is no way in which the debt ceiling cannot be raised because of the degree of military spending the off balance sheet the question isn't about the debt ceiling the question really is what changes are going to how is the government going to cut back spending on labor and on social security and on social programs in order to increase the military budget very substantially in order to give more bailout funds to the banks so so so so you sound pretty optimistic if i was a banker i would be very optimistic if i were an economist and this means that the economy will be moving into a depression for about five ten years to finance financial expert wall street

expert as you are then isn't a banker nor a banker nor economists like so you do your what makes you happy. and routes management endings you have understanding what's happening and my identity is basically that of a professor. is to tell people what the future is going to be not to represent any particular interests and so i like it when i can analyze and look at the economy as a system unfortunately the world is going into a depression and it's completely unnecessary and it's because it's following a. policy that is unrealistic if you really get into the depression i mean i mean i mean the problems in the united states are the shadow whatever we call the what happens in portugal and then in italy and some of the contributors it is a similar problem in europe and the united states the governments are taking the bank losses on to the balance sheet and adam smith said over two hundred years ago

that no government has ever repay its debts there's a natural tendency for debts to grow at compound interest in an obsolete but economies are growing in an s. curve and what makes the economy shrank is that more and more of the economic surplus is going into the financial sector normally the function of a recession is to wipe out the depth of the bankruptcy people lose the savings and then you begin with a lower debt but right now mr obama has broken his promise and not asked the banks to write down the depths to the mortgage debts to match the actual value of property so one quarter of american real estate has a higher mortgage than the property is worth until we start quoting karl marx let's take a short break now just to remind them to michael hudson is my guest on the show today a wall street analyst professor spotlight will be back shortly after a break some steam.

for the full story we've got it for. the biggest issues get a human voice face to face with the news makers.

welcome back to spotlight i'll go another in just a reminder that my guest on the show today is michael hudson professor and wall street financial analyst michael well we've been discussing the situation in the world economy first of all in the american economy and it looks like that the economic problems so far have. led to a wrong popularity of right wing ideas in that says well the tea party for one yes and does that mean that the us left today is incapable of offering the society offering business any any breakthrough ideas

ways of of becoming the problem of certainly is capable and what. the representative from ohio. has often said however it doesn't get much of a hearing and the left is so confused by the fact that it's a democratic president obama that is leading the move to the right mr obama is known to the right of the republican party the tea party people such as michele bachmann voted against the bank bailouts the republicans voted against the bank bailouts this is a democratic program and the democrats are very much like tony blair's labor party in london moving to the right of margaret thatcher that's the irony of this the labor parties and social democrats throughout the world are moving to the right of the old right wing parties and what you call the right the tea party which is backed by the billionaire koch brothers in america are actually using

a populist rhetoric their job isn't really to get elected their job is to make sure that a crazy person is nominated for the president who everybody will think is so bad that they would vote obama seeming to be the voice of reason and of course he's not the voice of reason he's an ultra right wing pro wall street anti-democratic republican but how do you make them look as if he is a democrat you have somebody so bad that people will vote for him as the lesser alternative in reality people in america will vote with their backsides you can be sure that in this election the voter turnout will be way down compared to the last election. what is behind you government decision to sue the banks from the mistake they want to sue the banks responsible for the current economic situation is it because a bomber wants to demonstrate that he's serving the people not the only guy here on why no there is a law in the united states

a three year statute of limitations banks sold hundreds of billions of dollars worth of fraudulent mortgages to fannie mae and freddie mac. . where the federal government is guaranteed basically the bank of america citi bank j.p. morgan banks you should think of these as gangs that made their money off find it financial fraud and by financial fraud i mean the mortgages that they gave just like an england when they looked at the property the property is only worth twenty two cents on the dollar in other words there was massive fraud no documentation loans fraudulent appraisals it is what my colleague professor bill black at kansas city calls a criminal genic environment with control for odd and finally the financial sector in america the investors realize we can't let crooks right handle our money because

the crooks are stealing our money the money of the rich for themselves and the idea is that the american banking you have a situation today when the american banks are not opening credit lines to europe or to other banks the banks in america believe that other banks are just as crooked as they are and if that's the case they're pulling back all the credit lines the economy is falling apart and until under the savings and loan crisis in the one nine hundred eighty s. two thousand bankers were sent to jail in america's case only one financial fraud has gone to jail bernie made off and he walked into police headquarters with his hands up and said i surrender there is been no prosecution of angelo mozilo of countrywide and the reason is they realize that the bank lobbyists have decriminalized crime the neo liberal say crime is part of the free market it's all how to get ahead and all of a sudden the pension funds and the others on wall street realized we've turned the economy over to crooks and we have to stop it and the three year statute of

limitations for hundreds of billions of dollars of fraud ran out so the banks are trying to legitimize and say fraud is a. it's all legal it's all empty or the government is saying look when you have thirteen trillion dollars worth of bailouts remember they're saying that they have to cut back social security because in fifty years there will be a trillion dollar deficit but they've just given thirteen trillions to the banks for the fraudulent loans obviously this is a crazy situation and even the wall street people realize there has to be some limit on crime at least when it's against themselves at this point we're all you see bankers banks are essential bankers dentists and lawyers this is something maybe also car mechanics america these these four. this is what the issue with of course banks are essential the bank depositors in america are insured

by the federal deposit insurance corporation and it's manager said look we could have we we could have closed down citibank everybody's deposits would have been protected the what was what would have been wiped out of citibank and chase and bank of america would have gone under would have been there gambles their casino capitalism their bets the wealthy would have lost the winners of the bets like goldman sachs wouldn't have been able to get programs of dollars and bets that the economy would collapse but the real economy everybody's insurance would have been all right and she loved our third week we could close them down so they me see the banks but nothing will happen nobody's. business nothing is changed because of the financial lobbyist do you think do you think you do you think europe can can do the same do you think the e.u. confront to see it it looks to me like the e.u.

is being torn apart by the fact that. america there are two models for europe one is the irish model where the european central bank told. meant bail out the banks you can afford it and now they took so much of the bad irish bank debt that ireland is in a depression for ten years the other alternative of iceland iceland so there's so much money we can't possibly pay sue us we're not going to push ourselves into feudalism in order to help you become our no masters we fought off your dollars and so while europe take the icelandic route or the irish route. that the fight now to the miracle is suffering one defeat or two in the new political divisions these days and it looks so far as if the here appearance first of all once to save the banks rather than jobs is the standard of living do you agree the european

people probably do not want people in the united states seventy four percent in the morning if they don't save the thing but the politicians who are they going to follow the voters or their campaign contributors they they campaign contributors financial interests make sure that the people who run for president are what in america we call useful idiots people who really believe that the banks have to come first that's that mr obama is that's what mrs merkel is and it's a tragedy because of the debts cannot be paid and there's a basic principle in economics that can't be paid won't be so we know the debts won't be paid and trying to pay a debt beyond your means simply imposes debt peonage on your population it's almost like feudalism and that's where europe and the us economy are going and i hope that the russia and the other post soviet states like latvia and of void that. as you

have already mentioned in this interview russia and post soviet states were taught first of all by americans politicians and experts these new liberal ideas but soufan. freenode sure capitalism has shown its dark side to third world countries including the post soviet countries today he is showing it to the world's most developed countries does it mean that we witnessing a collapse of this new liberal consensus we're seeing the victory the victory of the neo liberal consensus is to impoverish the rest of the world by taking the entire surplus in the form of finance i'll give an example suppose here a buying a house or a person the idea of a bank when you go to a bank to get a loan is how much does this person make how can we capitalize what he makes and make everything above subsistence paid to the bank for a loan a company in america. there will be a suppose you're

a corporate raider and you want to buy a company you go to the bank and you bid against others and you end up saying how much is the company's profit and cash flow you will pledge all of the profit. to the bank as interest and then you will hope to come in and downsize and outsource and shrink the company and hope that you can come up with a capital gain just like in real estate if you're an investor in america people will bid for an office building or a house and they'll say how much is the rent the winner is the person who pledges all the rent to the bank is interest and then you hope that somehow the price can go up and then you keep the price goes up as lot long as the federal reserve will flood the economy with money and then you hope that somehow the price will go enough for you to borrow the interest from the bank every year that's what economists call a ponzi scheme now it's called a made off scheme because mr made off with much bigger but the idea is that the bank you're borrowing the interest from the bank and this is a bubble some to the bubble of bursting and the question is who's going to pick up

the pieces will it be wall street or will it be the economy and it looks like wall street and the very wealthy are. taking more and more. of the national wealth and every time tree and the people are being left in poverty and the economy can only shrink under conditions like this if the next wave of the crisis will strike europe and this is probable do you think that russia will be in a better position than other and european countries because of its rheumatiz to the cause or not i don't think any country in history has ever been in a good position by exporting raw materials because you don't need many people to dig a hole in the ground a lot of money yes the russian have a lot of money but i'm not as it has all the money in the world today yes it would be a very good thing for it to use this money to do to educate the population and to re industrialised i don't think russia has helped itself by d.n.

just realizing and becoming a raw materials exporter americans call this being a hero of wooden drawer of water that is what the bible said and so america is doing exactly the opposite of how america germany england france and japan all got rich that ultimately the way to get rich is by adding value by manufacturing and with a skilled population and if you raise wages high wage labor is more productive labor it's better educated better housed russia is missing out on recycling that surplus to upgrade the population and that's very unfortunate it's missing an opportunity now is the time for it to take that opportunity thank you thank you very much for being with us in just a reminder that my guest on the show today was michael hudson professor wall street financial analyst and part time to get islam cannot mix political forms it's taking place. and that's it for now from the spotlight we'll be back with more comments on

what's going on in and outside russia from then on it seems.

the news today violence is once again flared up. these are the images go world has been seeing from the streets of canada. trying to corporations rule today. on main story hey all in all to see a plane carrying the triple. the want to move. around two hundred seventy going to the north east of moscow to comply with the full time

possible really cool to have survived this all star part critical to. the tragedy touchstone in iraq but also all the nation is gone museum was made from a lineup of international aid to the batteries for the first months of. the morals of business of savings across europe as people gathered to pay tribute to the victims of the crap. out of stories on t.v. this morning here in moscow germany's hard core rules of the billions of euros given by the country to ending up economy is in the cold but also he says the next time to go to the mission for us shouldn't european states need another cash injection meanwhile the italian senate supreme roommates of the move could be a new year old stars and ending weeks of the company wide strikes and protests.